SDCTA 9.16.2010 Desal Edited

8/2/2019 SDCTA 9.16.2010 Desal Edited

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Livia BorakAttorney, Coast Law Group

Legal Advisor, CERF

Desalination with a few

grains of salt

San Diego County Taxpayers AssociationTransportation, Energy, Water & Infrastructure Committee

September 16, 2010


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San Diego County Taxpayer

Association

Targeting Waste, Promoting

Efficiency.Mission Statement: The San Diego County

Taxpayers Association is a non-profit,

non-partisan organization, dedicated to

promoting accountable, cost-effective andefficient government andopposing

unnecessary taxes and fees.


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A little background

The Carlsbad Desalination Project is not

fully permitted

Every single project approval is conditional

Poseidon also has an open-ended mitigationrequirement 66 acres of wetlandmitigation for the life of the project

Subject to performance criteria if thosearent met, more mitigation is required


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In litigation


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Background continued

When the power plant goes away,

Poseidon will have to modify the desalplant

This means: changing the intake ordischarge, or more mitigation

New permits will also be required

Once the power plant shuts down..At the very least, every 5 years(NPDES)


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So, who pays for this?


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We do!

The San Diego County Water Authority (SDCWA)

term sheet lays it out The unit price for Poseidons water is:

Based on capital and operating costsAND

Includes any qualifying changes in the

law


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What are these changes in thelaw?

Any new law or amendment to existing law after

the contract date Law includes:

Local, state, or federal laws

Statutes

Codes

Regulations

PERMITS


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But theres more! We know the power plant is going awayat

the latest by 2017

Who pays for the required changes in the

intake, discharge or extra mitigation? We do!

Up to $20 million in capital plus $2.5 million in

operating costs


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Per the term sheet:

In the event the SDCWA does not takethe water it is required to take (56,000AF/year aka all of it) the SDCWA will

nonetheless pay Poseidon a per-acrefoot charge

Targeting waste, promoting efficiency

What if we dont need thewater?


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Whats in it for taxpayers?

$690 million in tax exempt private activity

bonds Thats $30 million/year in taxes CA loses

$350 million MWD subsidy ($250/AF) Passed on in MWD imported water rates

Possibly wholesale energy price for

distribution Passed on to other ratepayers

$780


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Whats the cost of the water?


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Only Poseidon Knows

Food and Water Watch study: $3500

Equinox Center study: $1800 to a high of$2800

Poseidon: $1100 plus delivery charge

$1600 total~$1865


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The risk of the most volatile

parts of the cost are going tobe paid by ratepayers and/or

taxpayersEnergy

Changes in the Law


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Energy


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San Diegos Water Sources:Assessing the Options

The cost of desalinated water is forecast

to rise at a relatively rapid real rateaveraging 4.5% over the time period to2030. Although technological advancescould lower capital and operating costs,

interest and energy expenses are

expected to drive costs up at a significantpace.


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Equinox Center, Fermanian Business &Economic Institute, July 2010


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In reality, we will never probably know or

see how much an individual has made offthe project.

If we were willing to assume risk, wecould get a lot more information, a lotmore transparency. The project isnt

public, the project is privateWe canchoose not to buy this product. Nobodysgot a gun to out heads saying buy at all

costs. - Rincon del Diablo Water District

Documents

SDCTA 9.16.2010 Desal Edited